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Unit 5 Assignment Template

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Economics
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Purdue University Global
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Unit 5 [BU224 Assignment Template]
Page 1 of 5
Unit 5 Assignment: Elasticity of Demand and
Consumer Surplus
Name:
Course Number and Section:
Date:

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Unit 5 [BU224 Assignment Template]
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Questions
1. The accompanying table shows the price and monthly demand for barrels of
gosum berries in Gondwanaland.
Price of gosum
berries per
barrel
Native Demand
for gosum berries
per month
5$100
0
$90
100
$80
200
$70
300
$60
400
$50
500
$40
600
$30
700
$20
800
$10
900
$0
1000
a. Using the midpoint method (show your work), calculate the price elasticity of
demand when the price of a barrel of gosum berries rises from $10 to $20. What
kind of elasticity is this value that you computed for the price elasticity of
demand and what does it mean for how demand will change based on a
change in price within this price range? (10 points)
800.00 900.00 = -100.00
-100.00/850.00 = - 0.1176
(900.00 + 800.00)/2 = 1700.00/2
$10.00/$15.00 = 0.6667
$20.00 - $10.00 = $10.00
($10.00 + $20.00)/2
=$30.00/2
The price elasticity of demand after the increase in price is les that one which means
that the demand is inelastic. This means that even after an increase in price, the
demand will reduce slightly leading to increased revenue generated by the sales.

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Unit 5 [BU224 Assignment Template] Unit 5 Assignment: Elasticity of Demand and Consumer Surplus Name: Course Number and Section: Date: Page 1 of 5 Unit 5 [BU224 Assignment Template] Questions 1. The accompanying table shows the price and monthly demand for barrels of gosum berries in Gondwanaland. Price of gosum berries per barrel 5$100 Native Demand for gosum berries per month 0 $90 100 $80 200 $70 300 $60 400 $50 500 $40 600 $30 700 $20 800 $10 900 $0 1000 a. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of a barrel of gosum berries rises from $10 to $20. What kind of elasticity is this value that you computed for the price elasticity of demand and what does it mean for how demand will change based on a change in price within this price range? (10 points) 800.00 – 900.00 = -100.00 -100.00/850.00 = - 0.1176 (900.00 + 800.00)/2 = 1700.00/2 $10.00/$15.00 = 0.6667 $20.00 - $10.00 = $10.00 ($10.00 + $20.00)/2 =$30.00/2 The price elasticity of demand after the increase in price is les that one which means that the demand is inelastic. This means that even after an increase in price, the demand will reduce slightly leading to increased revenue generated by the sales. Page 2 of 5 Unit 5 [BU224 Assignment Template] b. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of a barrel of gosum berries rises from $70 to $80. What kind of elasticity is ...
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